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Isis Mobile Wallet tests begin—but will consumers take to pay-by-phone?

Consumer Reports News: October 23, 2012 11:08 AM

Three big cellular service providers yesterday announced a "milestone" in the transformation of your smart phone into a payment device for purchases at bricks and mortar store cashiers. But October 22, 2012 will probably be as historically memorable as September 19, 2011.

Now, AT&T, Verizon Wireless, and T-Mobile have commenced testing Isis Mobile Wallet in Austin and Salt Lake City. American Express, whose eligible cards work with Isis-ready smart phones, hailed the start-up as "a significant achievement in terms of enabling consumer adoption of mobile payments," which promises to dramatically enhance the consumer shopping experience and prod the speed and growth of mobile NFC payments in the U.S.

Well, maybe. The problem is that Isis "solves" a non-existent problem. Consumers are perfectly happy making payments with credit or debit cards in the blink of an eye; by contrast, making an Isis payment took about 30 seconds, when we put a stopwatch to one trade-show demo.

Some analysts forecast that only one in five cell phone users will be making mobile payments via systems like Isis by the year 2016—and that prediction is contingent on an increase in the number of merchants willing to invest in the necessary NFC reader hardware, software, and cashier training, and on consumers finding convenience in fiddling with their sometimes persnickety cell phones and data service on a checkout line.

Even as a test, Isis seems like a tough draw for many customers. It's available in just two of 239 big U.S. cities. Pay-by-cell fanatics must choose from only nine of 109 smart phones to get an Isis-capable model, though some popular handsets are Isis-ready (including the Droid Incredible, the Galaxy S III, and the HTC Amaze, but not the iPhone), and up to 11 more models are promised by year's end.

Only certain American Express, Capital One, and Chase credit cards can be loaded onto the wallet right now, along with a Chase-issued Isis Cash prepaid card. Finally, only 956 retail locations are able to accept Isis payments in Austin and Salt Lake City, which means loyalists are out of luck in the other 99.4 percent of the nation's 1.5 million retail locations.

Bottom line: Isis, like Google Wallet, still seems to require a lot of work and needless complexity for the questionable convenience of paying by cell phone.